The Irish maker of Magners cider has held talks with Carlsberg, the world’s fourth-largest brewer by volume, about a deal to acquire its UK business as recently as last month.
The discussions between C&C Group and Carlsberg took place over the summer, with advisers working with both companies, according to people familiar with the matter. However, the talks stopped towards the end of August and it is unclear whether they will be restarted, these people said.
C&C has been searching for deals that will help it expand outside its main markets of Ireland and Scotland, which account for more than 80 per cent of its profits, according to analysts. The company was rebuffed last year by tavern-chain operator Spirit Pub, which eventually agreed to be acquired by its larger rival Greene King in a £774m deal.
Carlsberg has a 14 per cent market share in the UK and operates its own distribution network for a portfolio brands, including the fast-growing cider Somersby. But the company has had a torrid time in Russia, where its big bet to become the country’s largest brewer with 40 per cent of the market, turned sour after a rise in taxation and a weaker economy due to falling oil prices and the fallout from Russia’s annexation of Crimea.
This has put pressure on the company’s finances and Cees ’t Hart, the former head of a Dutch dairy company who took over at Carlsberg in June, said last month that the brewer had a “heightened sense of urgency” over cutting costs.
The resignation in June of Jørgen Buhl Rasmussen, who had led the business for seven years, and his replacement by Mr ’t Hart is thought to have been a factor in the discussions being put on hold.
The talks come against the backdrop of further consolidation in the brewing sector. Anheuser-Busch InBev, the world’s largest brewer, is exploring a takeover of the industry number two SABMiller, in a deal that would create a company responsible for one in three beers produced globally.
Despite its troubles, Carlsberg shares have risen 6.5 per cent since the start of the year, outpacing both AB InBev and SABMiller, giving the company a market value of DKr78.7bn ($11.8bn). C&C shares have fallen 3.5 per cent, giving it a market capitalisation of €1.19bn
After several years of exceptionally strong growth in the cider sector, boosted by fruit-flavoured variants, sales have ground to a halt. Cider sales in supermarkets fell 0.6 per cent in the year to the end of March 2015, according to Kantar Worldpanel. But total UK cider sales amount to £735m, up strongly compared with £279m in 2007.
C&C and Carlsberg declined to comment.